Sugar industry awaits Wilmar decision

Wilmar Sugar has until Tuesday to decide whether it will negotiate with an industry working group or set up its own marketing company.
Photo: Glenn Hunt

by
Tim Binsted

Wilmar Sugar has until Tuesday to decide whether to participate in an industry working group that
Queensland Sugar Limited
chief executive Greg Beashel says will be critical for QSL and Australia’s canegrowers.

Wilmar sent the nation’s $2 billion sugar industry into turmoil in May when the Singapore-based agribusiness giant announced plans to undermine a century-old agreement and remove its sugar from the QSL ­collective export pool.

QSL is a member-owned non-profit organisation that has been the sole handler of the industry’s financing, pricing, marketing and logistics operations.

The Wilmar move sparked outrage from peak body Canegrowers and fuelled fears that cane farmers would be pushed into a sugar pricing system with minimal transparency.

Wilmar processes 2 million tonnes of sugar – or 60 per cent of the nation’s production – through its eight Queensland mills.

Last week Queensland Agriculture Minister
John McVeigh
offered to ­facilitate a working group to find a business model that is acceptable to the industry.

Wilmar has until Tuesday to decide whether it is willing to negotiate or will plough ahead with its decision to pull its sugar and set up its own joint marketing company to rival QSL from 2017.

Mr Beashel said that both QSL and Australia’s second-biggest miller, Mackay Sugar, had agreed to take part in Mr McVeigh’s working group, but Wilmar was “dragging its feet".

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“This is critical. Whether Wilmar decide to participate in the minister’s discussions will be key," Mr Beashel said.

“In general the industry has been very co-operative between millers and growers. This is the first time anyone has moved away from working with growers, and it is a major challenge for the industry.

“Our constitution says we must act in the best interests of the industry. It is unusual for us to speak out against our members [of which Wilmar is the biggest], but they shouldn’t be able to force our growers into a system they don’t want," he said.

Wilmar Sugar boss Jean-Luc Bohbot has flown from Singapore to Queensland several times in recent months to try and stem the tide of criticism and build support for Wilmar’s new marketing company.

But Mr Beashel, who says he is advocating a real choice for growers between Wilmar and QSL, said Wilmar’s top brass were disappointingly absent from last week’s talks with minister McVeigh.

“The Singapore guys have been amazingly absent from the whole debate," he said.

A spokesperson for Wilmar Sugar declined to comment on Sunday. But Mr Bohbot told The ­Australian Financial Review two weeks ago that QSL was an outdated system, and that Wilmar has the capability to realise better prices for Wilmar and canegrowers by leveraging its huge global trading network.

Mr Beashel said he is waiting for Wilmar to prove it can generate better returns outside the QSL umbrella.

The situation intensified for QSL last week when Thai-owned MSF Sugar said it would follow Wilmar and exit the QSL system.